Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 1 Managing Information Technology 6 th Edition CHAPTER 14 PLANNING INFORMATION SYSTEMS RESOURCES

Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 2 Planning Information Systems Resources In addition to understanding the technical and operation issues of the IS organization, IT managers must also align IT investments with the organization’s strategy Setting a clear direction for the organizational information resources is a critical high-level IT management activity

Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 3 The Need for Direction An organizational plan for the development of information resources helps organizations to: – Share information among diverse parts of the organization – Communicate the future organizational plans to others – Provide a consistent rationale for making individual decisions – Make decisions about how the “business” of IS will be conducted – Plan for and respond to traumatic incidents

Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 4 Business and IT Alignment Alignment of IT strategy with the organization's business strategy is a fundamental principle Business Strategy Information Technology Strategy

Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 5 Outputs of the Direction-Setting Process Formally developing an overall information resources plan may be new to many organizations There are several deliverables during the process direction-setting process – Information resources assessment – Information vision – Information architecture – Strategic IS plan – Operational IS plan

Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 6 Outputs of the Direction-Setting Process Includes inventorying and critically evaluating an organization’s technical and human resources in terms of how well they are meeting the organization’s business needs Information Resources Assessment

Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 7 Outputs of the Direction-Setting Process An ideal view of the future state of the organization’s information resources Must be specific enough to provide policy guidelines for individual decisions Must focus on the long term Although some firms combine them, there is a difference between vision and architecture Information vision and architecture

Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 8 Outputs of the Direction-Setting Process A written expression of the desired future about how information will be used and managed in the organization Information Vision Depicts the way an organization’s information resources will be deployed to deliver that vision Information Technology Architecture

Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 9 Outputs of the Direction-Setting Process Information resources plans Contains a set of longer-term objectives that represent measurable movement toward the information vision and technology architecture and a set of associated major initiatives that must be undertaken to achieve these objectives Strategic IS plan

Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 10 Outputs of the Direction-Setting Process Information resources plans Contains a set of longer-term objectives that represent measurable movement toward the information vision and technology architecture and a set of associated major initiatives that must be undertaken to achieve these objectives Operational IS Plan

Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 11 The Process Of Setting Direction IS decisions must be tightly aligned with the direction of the business Decisions should impact the next step in the process, but that is not always the case IS and business planning

Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 12 The Process Of Setting Direction Current performance is compared to a previous plan, competitors, or a set of past objectives Comparisons made using: – Operating data – Survey of internal satisfaction with IS performance – Benchmarks of what is being achieved at other organizations Assessment

Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 13 The Process Of Setting Direction Envision an ideal or intended state at some point in the future At this point, no definition of how to achieve the vision is included Vision

Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 14 The Process Of Setting Direction The process of constructing a viable fit between the organization’s objectives and resources and its changing market and technological opportunities Strategic planning

Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 15 The Process Of Setting Direction Lays out the major actions the organization needs to carry out in the shorter term to activate its strategic initiatives Operational planning

Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 16 The Process Of Setting Direction Needs-based (or project-oriented) planning – Until recently, many IS organizations were not involved in the organization’s business planning – These organizations tended to adopt a needs-based planning Bottom-up, immediate approach to information resources planning Used when a specific, urgent business need called for a new system Emphasis on project planning rather than overall organizational planning Traditional planning in the IS organization

Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 17 Assessing Current Information Resources Should measure current levels of information resources use within the organization and compare it to a set of standards Standards can come from: – Past performance – Technical benchmarks – Industry norms – “Best of class” estimates from other companies Measuring IS use

Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 18 Assessing Current Information Resources IT managers should assess the attitudes of users and IS staff about the performance of the IS organization in relating its activities to the needs and direction of the business Measuring Attitudes of Users

Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 19 Assessing Current Information Resources Should set forth the fundamental rationale (or reason to exist) for activities of the IS department Should align with the needs of the business IS Organizational Mission Statement

Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 20 Assessing Current Information Resources Annual assessment of actual performance compared to previous goals should be conducted Assessing Performance Against Goals

Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 21 Creating an Information Vision Information vision represents how senior management wants information to be used and managed in the future Steps: 1.Speculation on how the business’s competitive environment will change and how the company should take advantage of it 2.Business vision is specified and written 3.Implications for information use are outlined 4.Information vision is written

Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 22 Designing the IT Architecture IT Architecture – Specifies how the technological and human assets and the IS organization should be deployed in the future to meet the information vision – Two components: Technological Human

Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 23 Designing the IT Architecture Four stages of IT architecture maturity: 1.Business Silos – companies seek to maximize individual business unit or functional needs 2.Standardized Technology – companies seek to enable IT efficiencies through shared services and application rationalization, resulting in enterprise-wide IT standardization

Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 24 Designing the IT Architecture Four stages of IT architecture maturity: 3.Optimized Core – companies implement enterprise-wide business processes and data with tightly linked systems and processes (such as with ERP systems) 4.Business Modularity – companies seek global flexibility with loosely coupled IT-enabled business process components, which enable local differences but also preserve enterprise- wide standards

Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 25 Designing the IT Architecture

Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 26 The Strategic IS Plan Strategic IS Plan – Statement of the major objectives and initiatives that the IS organization and business managers must accomplish over some time period in order to enable the information vision and the IT architecture, and to be aligned with the strategic plan for the overall business

Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 27 The Strategic IS Plan This planning process includes: – Setting objectives – Conducting internal and external analyses – Establishing strategic initiatives Most planning processes involve iterations through these steps The Strategic IS Planning Process

Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 28 The Strategic IS Plan Setting objectives – Measures are identified for each of the key result areas for the organization – IS objectives can be established for: IS department service image IS personnel productivity The appropriateness of technology applications Increased effectiveness Access to external resources The Strategic IS Planning Process

Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 29 The Strategic IS Plan Conducting internal and external analyses – Review external environment and internal capabilities – Called a SWOT (strengths, weaknesses, opportunities, and threats) analysis – Identifies leverage points or limiting factors for new strategic initiatives The Strategic IS Planning Process

Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 30 The Strategic IS Plan Establishing strategic initiatives – Identifying important initiatives needed to enhance the role of IT – None of the initiatives is spelled out in enough detail to be immediately translated into action – These initiatives will be translated into actual projects in the operational planning step The Strategic IS Planning Process

Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 31 Strategy Agenda

Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 32 The Strategic IS Plan Critical success factors (CSFs) – Information needs and processes critical to the success of a business function like sales or to the entire organization Analysis of competitive forces – Competitive advantage can come about by changing the balance of power between a business and the other actors in the industry Tools for identifying IT strategic opportunities

Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 33 The Strategic IS Plan Analysis of competitive forces (cont’d) – A company can create strategic advantage by: Raising the stakes for competition in the market Providing difficult-to-duplicate product/service features Providing unique product features or customer services Making it easier for customers to do business with the company and more difficult to switch to a competitor More strongly linking with suppliers to obtain lower- cost, higher-quality materials Tools for identifying IT strategic opportunities

Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 34 The Strategic IS Plan Value chain analysis – IT can be used in each activity of the value chain to capture, manipulate, and distribute the data necessary to support that activity and its linkages to other activities – Idea-generation and action-planning sessions can be used to generate strategic applications of IT Tools for identifying IT strategic opportunities

Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 35 The Strategic IS Plan

Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 36 The Strategic IS Plan Scenario planning – Used by business leaders to address an uncertain future – Alternative scenarios for what the future might look like are developed – Typically a few major drivers are focused on to create a “scenario space” and then characteristics of the scenarios are used to help plan for the future Tools for identifying IT strategic opportunities

Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 37 The Operational IS Plan The initiatives in the strategic IS plan are translated into an action plan incorporating: – Precise expected results – Due dates – Priorities – Responsibilities

Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 38 The Operational IS Plan Multiyear operational IS plan developed for up to a three-year time period Focus is on project definition, selection, and prioritization Steps: 1.Define multiyear IS operating objectives 2.IS development or acquisition projects then defined and selected

Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 39 The Operational IS Plan Portfolio view of IS operational plan allows for a balance between risks and return of IS projects

Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 40 The Operational IS Plan Shorter-term operational IS plan developed for up to a one-year period Focus is on specific tasks to be completed on projects that are currently underway or ready to be started Linked to the firm’s business priorities by the annual budget

Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 41 Guidelines for Effective IS Planning 1.Early clarification of the purpose of the planning process is essential 2.The information resources planning effort should be viewed as an iterative effort 3.The plan should reflect realistic expectations 4.A unified approach to delivering IT services should be used 5.An effective IS plan will also take into consideration potential barriers and constraints

Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 42 Benefits of Information Resources Planning Better IS resource allocation Communicating budget needs with top management Creating a context for IT decisions Achieving both integration and innovation Evaluating vendor options Meeting management expectations